Talk of trade wars and tariffs is on everyone’s lips in 2025. What do we need to understand, from a statistical standpoint? Here’s a handy explainer
1. Each economy’s trade should be balanced – FALSE
Put simply, a trade balance is the difference between an economy’s exports and its imports over a given period. When exports are higher than imports, we see a trade surplus. When the opposite is true, i.e. when the value of imports exceeds the value of exports, then a trade deficit is recorded.
These are simple accounting relationships and do not imply that balances should tend to zero, not even in the long run. High imports may reflect willingness by consumers and businesses to access more variety and lower prices, including for inputs to be used in domestic production.
On the other hand, trade should be balanced at the global level, because – when properly valued – individual economies’ surpluses and deficits should sum to zero.
Importantly, the balance of trade, and even more the balance of trade in goods (see Figure 1), is just one small piece of a much larger puzzle.
Figure 1: Trade balances, goods, G7 economies
2. Services trade matters – TRUE
When someone thinks about international trade, chances are they’re thinking about cross-border trade in goods, such as agricultural products, raw materials, energy, and a broad range of manufactured goods such as machinery, transport equipment, electronics, and much more. According to recent WTO estimates, goods worth over USD 24 trillion crossed at least one international border in 2024, which is about USD 3,000 per living human being.
But services trade is increasingly important. According to WTO estimates, global trade in services reached nearly USD 8.7 trillion in 2024. While levels remain lower than for goods, services trade has been growing at a faster pace than goods trade in recent years. This is primarily because many services can now be delivered digitally, allowing them to ‘cross’ international borders much like physical goods do. In fact, services trade covers a broad range of products, from ‘physical’ services such as transport, travel and construction, to more ‘intangible’ services like consulting, legal, engineering, architectural services and advertising, and services related to intellectual property such as software and audiovisuals.
Tracking the provision of streaming services or the supply of online advertising is certainly more challenging than counting boxes of oranges at customs. However, long gone are the days of services being dubbed ‘invisibles’! Using a variety of sources (including surveys, payments data, and administrative sources), statisticians pay as much attention to accurately recording the flows of intangible services as they do to tracking the trade of physical goods.
Once exports and imports of services are compiled, the services trade balance can be computed, and (unsurprisingly) it provides quite a different view than the trade in goods balance (Figure 2).
Figure 2: Trade balances, services, G7 economies
3. The balance of payments should be balanced – UM, LET’S EXPLAIN
Sharp-eyed readers will have noticed that aggregating the goods balance and the services balance will not result in a ‘balanced balance’. This is because the balance of payments (BOP) covers all transactions between residents and non-residents of an economy, not just trade in goods and services.
International transactions also involve flows of income (such as wages of border workers, dividends from oversee investments, and more) which residents of an economy earn from or pay to the rest of the world. These constitute the primary and secondary income balances, which together with the goods and services balances make up the current account balance.
But that’s not all. Capital transfers, covering for instance (but not only) payments businesses make to acquire brand names, copyrights and trademarks, have their own balance as well.
The sum of the current and capital account balances shows whether an economy is lending (surplus) or borrowing (deficit) from the rest of the world. The financial account, the final BOP component, records all financial flows (such as foreign direct investment and portfolio investment), into or out of the reporting economy, showing how the surplus (or deficit) in the current and capital accounts are financed.
In other words, the balance of the financial account is, errors and omissions apart, equivalent to the sum of the current and capital account balances, which is how the BOP got its name.
4. Digital trade is not captured in international trade statistics – FALSE
Digital trade is defined as all international trade that is digitally ordered and/or digitally delivered. Both goods and services can be digitally ordered, for instance via an e-commerce website or a digital intermediation platform, by individual consumers as well as businesses of any size. But only services can be digitally delivered, and this has contributed to the significant growth of overall trade in services in the past decade. Indeed, if they couldn’t be digitally delivered, many services wouldn’t be traded at all!
While digital trade transactions are fully included in the existing measurement frameworks, they cannot be (in general) separately identified. This ‘invisibility’ may contribute to the common but false perception that digital trade is entirely unaccounted for in official statistics.
Despite the potential measurement errors (inherent in any statistics), digital trade does not go unrecorded. Statistical compilers are aware of the additional measurement challenges posed by digitalisation and are adapting their surveys and exploring new data sources to ensure the measurements are as accurate as possible, while working to separately identify digitally ordered and digitally delivered transactions.
Antonella Liberatore is head of trade and business statisticsOECD). She states: “The views expressed are my own and do not necessarily reflect those of my organisation”.
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